CONVERTIBLE NOTES PAYABLE

12 Months Ended

Dec. 31, 2023

Convertible Notes Payable

CONVERTIBLE NOTES PAYABLE

23. CONVERTIBLE NOTES PAYABLE

Convertible notes payable at December 31, 2023 and 2022, were comprised of the following:

	Conversion price per share	Interest rate	Due date	December 31, 2023			December 31, 2022
Convertible promissory note	$4.00	4%	May 10, 2024	$	-		$	660,000
Convertible promissory note – original issue discount (“OID”) only	90% of 5-day VWAP	OID Only	September 28, 2024		1,673,000			-
AVLP convertible promissory notes, principal	$0.35 (AVLP stock)	7%	August 22, 2025		9,911,000			9,911,000
GIGA senior secured convertible notes - in default	$0.25 (GIGA stock)	18%	October 11, 2024		4,388,000			-
ROI senior secured convertible note	$0.11 (ROI stock)	OID Only	April 27, 2024		6,513,000			-
Fair value of embedded conversion options					910,000			2,316,000
Total convertible notes payable					23,395,000			12,887,000
Less: unamortized debt discounts					(2,179,000	)		(111,000	)
Total convertible notes payable, net of financing cost, long term				$	21,216,000		$	12,776,000
Less: current portion					(11,763,000	)		(1,325,000	)
Convertible notes payable, net of financing cost – long-term portion				$	9,453,000		$	11,451,000

The contractual maturities of the Company’s convertible notes payable, assuming the exercise of all extensions that are exercisable solely at the Company’s option, as of December 31, 2023, were:

Year	Principal
2024	$	12,574,000
2025		10,821,000
	$	23,395,000

Significant inputs associated with the embedded conversion options include:

	December 31, 2023		December 31, 2022		At Inception
Contractual term in years		0.3		2.7		1.0
Volatility		138%		82%		111%
Dividend yield		0%		0%		0%
Risk-free interest rate		3.8%		4.0%		3.5%

The following table summarizes the changes in embedded conversion option derivative liabilities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the years ended December 31, 2023 and 2022:

	For the Year Ended
	December 31,
	2023			2022
Beginning balance	$	2,316,000		$	-
Fair value of embedded conversion options issued or acquired		1,652,000			5,851,000
Change in fair value		(3,058,000	)		(3,535,000	)
Ending balance	$	910,000		$	2,316,000

The following table summarizes the changes in convertible notes payable measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3) for the years ended December 31, 2023 and 2022:

	For the Year Ended
	December 31,
	2023			2022
Beginning balance	$	10,571,000		$	660,000
Convertible notes from acquisitions		-			9,911,000
Issuance of convertible notes		12,441,000			-
Transfer out of level 3		(527,000	)		-
Ending balance	$	22,485,000		$	10,571,000

In October 2023 GIGA entered into an exchange and waiver agreement related to its senior secured convertible promissory notes, which resulted in a loss on extinguishment of debt of $1.4 million.